Dec. 2, Shane Goodwin, associate dean and professor of practice at the Cox School of Business at SMU Dallas, for a commentary highlighting the profound impact the just-established Texas Business Court will have on corporate litigation. Published in the Dallas Morning News under the heading Texas Business Court is a bold experiment in corporate governance: https://tinyurl.com/yst92tdu
The just-established Texas Business Court represents more than just a judicial development, it marks a transformative moment for corporate governance in the United States.
With this bold initiative, Texas has positioned itself as a direct challenger to Delaware’s long-standing dominance in corporate litigation. As I explore in my paper, “The Lone Star Docket: How the Texas Business Court Will Shape the Corporate Landscape,” this court is currently operational in five of its 11 geographical divisions, including Dallas, Houston, San Antonio and Austin.
The court is not merely about competing for corporate charters; it aims to redefine the framework and expectations of corporate governance for the 21st century, offering a vision that balances innovation, efficiency and accountability.
This specialized court is designed to handle complex disputes with efficiency and expertise.
By Shane Goodwin
The just-established Texas Business Court represents more than just a judicial development, it marks a transformative moment for corporate governance in the United States.
With this bold initiative, Texas has positioned itself as a direct challenger to Delaware’s long-standing dominance in corporate litigation. As I explore in my paper, “The Lone Star Docket: How the Texas Business Court Will Shape the Corporate Landscape,” this court is currently operational in five of its 11 geographical divisions, including Dallas, Houston, San Antonio and Austin.
The court is not merely about competing for corporate charters; it aims to redefine the framework and expectations of corporate governance for the 21st century, offering a vision that balances innovation, efficiency and accountability.
For over a century, Delaware has held the throne as the preferred corporate jurisdiction, thanks to its specialized Court of Chancery and its ability to resolve complex corporate disputes efficiently. But cracks in Delaware’s dominance are starting to show. Take, for example, the recent Tornetta vs. Musk ruling, which invalidated Elon Musk’s $56 billion compensation package. This landmark case sparked public criticism of Delaware’s predictability and fairness, criticism Musk himself amplified by advocating for Tesla’s reincorporation in Texas. Such high-profile cases reveal a deeper undercurrent: The corporate world is ready for alternatives.
Texas is uniquely positioned to meet this moment. Its economy expanded to $2.6 trillion at an annual rate of 7.4%, while the nation expanded at 2.9%. The state is a magnet for innovation, with industries ranging from energy to technology growing rapidly, bolstered by a highly educated and diverse workforce. Beyond its economic appeal, Texas offers a distinct advantage: its business-friendly ethos.
The Texas Business Court is an embodiment of this philosophy. Unlike the generalist courts that dominate many states, this specialized court is designed to handle complex corporate and commercial disputes with efficiency and expertise. But Texas isn’t just trying to replicate Delaware — it’s innovating. The court’s design reflects a commitment to creating a modern legal framework that aligns with the needs of today’s businesses while addressing long-standing frustrations with existing systems.
However, this bold experiment is not without its challenges. Unlike Delaware, which relies on bench trials for corporate disputes, Texas mandates jury trials in such cases as part of its constitutional framework. While this approach underscores democratic participation and aligns with the state’s broader judicial philosophy, it introduces an inherent unpredictability many businesses may prefer to avoid.
Second, judicial appointments in Texas tend to have shorter terms, raising questions about continuity and expertise. Businesses trust Delaware’s Court of Chancery in part because of the deep institutional knowledge of its judges, something Texas must work to replicate.
Finally, the increasing federalization of corporate law adds another layer of complexity. As federal oversight grows, Texas must carefully navigate how its new court interacts with these evolving regulatory frameworks.
The Texas Business Court represents more than just competition with Delaware. It’s a reimagining of corporate governance, a bold statement that states can and should compete not just for business filings but for the principles and practices that underpin the corporate world.
Several strategies can ensure the success of this court. Texas must focus on fostering judicial expertise, addressing the unpredictability of jury trials, and building trust with the business community. Starting with targeted, high-impact cases, the Texas Business Court can establish a track record of fairness, efficiency and innovation that draws both businesses and attention.
The stakes could not be higher. The legal arms race between states is intensifying, and the ability to adapt to corporate demands while maintaining judicial integrity will define the winners. Texas is not just entering the game, it’s rewriting the rules.
Policymakers, corporate leaders and legal practitioners should watch closely. The Texas Business Court is more than a judicial experiment; it is a vision for the future of corporate governance, where innovation, sustainability and state competition converge to create a dynamic legal landscape.
Shane Goodwin is the associate dean and a professor of practice at the Cox School of Business at Southern Methodist University and an adjunct professor at SMU Dedman School of Law.